The main legal point established in the judgment is the distinction between an order of assessment under Section 143(3) and an order in pursuance of directions of the Dispute Resolution Panel under Section 144C(5) of the Income Tax Act, 1961.

INDIRA BANERJEE, J.

1. This appeal is against a judgment and order dated 14.6.2017 of the learned Single Bench dismissing the writ petition, being W.P.No.1787 of 2017, filed by the appellant writ petitioner, with liberty to challenge the impugned order of assessment dated 18.11.2016 passed by the Income Tax Officer, Corporate Ward 2(4), being the second respondent, before the First Appellate Authority under Section 246(1)(a) of the Income Tax Act, 1961, hereinafter referred to as the 1961 Act, within a period of four weeks from the date of receipt of a copy of the said judgment and order.

2. The appellant, a private limited company engaged in the business of real estate development, filed its Income Tax Returns electronically for the assessment year 2012-2013 on 29.9.2012, declaring 'Nil' income.

3. The case of the appellant was selected for scrutiny and notice dated 8.8.2013 was issued to the appellant under Section 143(2) of the 1961 Act. In the course of scrutiny proceedings, it was found that the appellant had entered into an international transaction within the meaning of Section 92B of the 1961 Act for Compulsory Convertible Debentures (CCD) of the value of Rs.4,60,32,949/- at book interest of 15% per annum in the assessment year in question, in that it had received loan/advance in US Dollars from IIROF 4 Artemis Ltd., Cyprus, an associated enterprise of the appellant abroad, within the meaning of Section 92A of the 1961 Act.

4. Section 92(1) of the 1961 Act provides that any income arising from an international transaction within the meaning of Section 92B is to be computed having regard to the arm's length price (ALP).

5. Section 92C of the 1961 Act provides that the ALP in relation to an international transaction is to be determined by one of the following methods, being the most appropriate method, having regard to the nature or class of transaction:

(i) comparable uncontrolled price method;

(ii) resale price method;

(iii) costs plus method;

(iv) profit split method;

(v) transactional net margin method,

or any other method as may be prescribed by the Board. The most appropriate method is to be applied for determination of ALP, in any manner as may be prescribed. The proviso makes an exception, where the variation between the ALP determined and the price at which the international transaction has actually been undertaken does not exceed 3%. In such a case, the latter, i.e., price at which the international transaction has actually been undertaken, might be notified.

6. Section 92CA of the 1961 Act provides for reference to the Transfer Pricing Officer for computation of the ALP in relation to the international transaction with previous approval of the Principal Commissioner or Commissioner. Sub-section 3 to Section 92CA requires the Transfer Pricing Officer to determine the ALP by an order in writing. Such order in writing has to be made within the prescribed period of limitation. Under sub-section 4 to Section 92CA, on receipt of an order of the Transfer Pricing Officer, the Assessing Officer is to proceed to compute the total income of the assessee under sub-section 4 of Section 92C in conformity with the ALP so determined by the Transfer Pricing Officer.

7. The case of the appellant was referred to the Transfer Pricing Officer for determining the ALP with reference to all transactions reported in Form No.3 CEB filed by the appellant. The Fully and Compulsorily Convertible Debentures (FCCD) carried an inherent option to convert, which was not the case in a typical loan transaction. Accordingly, the Transfer Pricing Officer issued a show cause notice dated 14.12.2015 to the appellant directing the appellant to show cause as to why interest payment on FCCD should not be taken as per comparables for the purpose of ALP calculation, to which the appellant filed a detailed reply.

8. The Transfer Pricing Officer observed that the Compulsory Convertible Debentures (CCD) was an instrument mandatorily and automatically convertibl